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Origen Renews Financing Facility
By Alton Gary Simpson
Origen Financial Inc. has renewed its financing facility with Citigroup Global Markets Realty Corporation for an additional 12 months, effective through March 31, 2008. Origen is based in Southfield, Mich., with significant operations in Fort Worth, Texas.
"We are extremely pleased with both the terms of the facility and the Citigroup relationship," said Mark Landschulz, executive vice president of portfolio management at Origen. "Contrary to the conditions causing recent liquidity concerns for subprime lenders, Origen's demonstrated credit quality and loan performance have exceeded expectations and continued to improve and Origen has had no difficulty in meeting all the financial covenants of its debt agreements. As a result, the terms of our financing facility have also improved, in the form of lower borrowing costs, a higher advance rate and increased capacity, from $235 million to $250 million."
Andy Geater, chief financial officer of Origen, acknowledged that traditionally manufactured housing has been associated with lower income individuals. "While that is generally true," he said. "That doesn't necessarily mean that they don't pay their bills on time." He said that the average FICO credit score of Origen's borrowers was 720.
Mr. Geater added that Origen is known for having strict underwriting standards and a conservative approach to lending. "We require downpayments for our loans. We don't do partial documentation loans or ARMs," he explained. This has helped the company avoid much of the turmoil that is impacting the rest of the mortgage industry. And according to Mr. Geater, Origen's conservative approach to lending has paid off. "Our origination volume is up substantially," he said. "Volume has been up in excess of 20% in application volume and closed loans."
The renewal of the Citigroup financing facility provides Origen with the liquidity necessary to fund its program of loan originations and facilitates the accumulation of such loans for future inclusion in securitized transactions in the asset-backed securities market. Noting that mortgage-backed securities have taken something of a hit in the eyes of Wall Street in recent weeks, Mr. Geater said that the company is always worried about being tarred with the same brush as others in the manufactured home lending sector.
"The [manufactured home lending] industry has seen quite a bit of shrinkage in the last few years. We're really the only publicly traded company in this sector," he said. "But, our securities have always performed well in the past and we have a good cadre of investors who follow our stock."
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